Brazil Daily

Brazil’s controversial foreign minister to face chop if Biden wins

Today, how a Biden win in the U.S. could cost Brazil’s Foreign Minister his job.. The plans to vaccinate Brazilians against Covid-19 in January. And what you need to know about Brazil’s municipal races.

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Biden win could lead to cabinet reshuffle in Brazil

The U.S. presidential election will take place in 18 days — but more than 15 million Americans have already voted early. [restricted]And the odds suggest that former Vice President Joe Biden will unseat Donald Trump (per FiveThirtyEight’s model, Mr. Biden has an 87-percent chance to win the electoral college). And while a Biden win shouldn’t substantially alter the nature of Brazil-U.S.’ never-too-hot-never-too-cold relations, it could lead to changes in the Jair Bolsonaro cabinet.

  • According to Brasília correspondent Débora Álvares, the Brazilian president’s newfound allies — a group of ideology-free parties known as the “Big Center” — want to use the U.S. election as a pretext to bin Foreign Minister Ernesto Araújo, which they have reportedly been looking forward to for some time.
  • Mr. Araújo is known for his anti-globalist, Sinophobic views. He also wrote once that Donald Trump is the West’s hope for salvation against “Stalin’s or Mao’s or Pol Pot’s henchmen.” He has become a nuisance for the Brazilian political establishment, in particular those defending the interests of agribusiness — who see China as their best client, not an existential threat.
  • His latest controversy involved hosting U.S. Secretary of State Mike Pompeo on a visit to the Venezuelan border, just weeks before the U.S. election. The Foreign Minister was accused of jeopardizing future relations with a potential future Biden administration

Scapegoat. Mr. Araújo is accused by career diplomats of undermining centuries of diplomatic tradition in less than two years. But while he has become a lightning rod for criticism, the minister is following the tone set by the president himself — who has made countless displays of sycophancy towards Donald Trump and hostility towards China.

Why it matters. Ernesto Araújo is arguably the cabinet member who is the most loyal to the Bolsonaro family — and champions the president’s positions unapologetically.

  • Getting rid of Mr. Araújo would be yet another example of Mr. Bolsonaro breaking with Bolsonarism — in a movement towards moderation (at least in tone) to ensure stability to the administration. Those are calculated moves by a president who has proved to be much savvier than given credit for: while remaining firmly on the right wing, he is attempting to gain ground among less radical supporters, while knowing he remains the best (perhaps only) option for hardcore far-right voters.

You should listen: Explaining Brazil #117: Biden or Trump, what changes for Brazil?

Government announces Covid-19 vaccine plan for January

The Brazilian Health Ministry presented its 2021 National Immunizations Program on Thursday, which forecasts distributing a coronavirus vaccine as early as January 2021. The first phase of the plan is to make 15 million doses available, to be used on 7 percent of the population.

  • While four potential vaccines are being tested in Brazil, only one — being developed by the University of Oxford and British-Swedish pharmaceutical company AstraZeneca — made it onto the national vaccine calendar. The government believes trials of that vaccine will be complete by November.
  • The ministry’s decision not to include the potential vaccine being developed by Chinese company Sinovac Biotech in partnership with the São Paulo state government came across as puzzling. A council of state health officials asked, in a letter, for the government to reconsider.

Why it matters. The Health Ministry’s move reignites fears that President Jair Bolsonaro will turn the coronavirus vaccine into a new political war — as he aims to score points on São Paulo Governor João Doria, one of his fiercest political rivals.

Anti-vaxxer? Polls show Brazilians are eager to get a vaccine — and many want immunization to be mandatory. However, Mr. Bolsonaro has leaned in the opposite direction, even voicing some arguments used by anti-vaxxer movements, such as individual freedoms. In August, he said “nobody can force anybody to take a vaccine.” 

  • Moreover, experts fear the president’s supporters could become overly skeptical of what they call “the Chinese vaccine” and refuse immunization. A new poll conducted by Brazilian and Canadian universities show that only 54 percent of government supporters want to take a vaccine — versus 79 percent among detractors.

Election 2020 snapshot

Brazil’s municipal elections will take place in exactly 30 days’ time. This is what you need to know:

  • Ads. This week marked the beginning of political ads on television and radio — which, with millions of people still staying home, gained renewed importance in 2020. Candidates have the right to free airtime, but it is distributed between all political parties, in proportion with the number of seats the party holds in their respective state legislatures.
  • São Paulo. Incumbent Bruno Covas — who leads a six-party coalition — monopolizes 40 percent of airtime in São Paulo, and it has worked to his advantage. The latest poll showed him virtually tied with the frontrunner, Congressman Celso Russomano (22 and 25 percent of votes, respectively). More importantly, Mr. Covas lowered his rejection rates by 8 points — to 23 percent.
  • Leftist debacle. The Workers’ Party has won the race for São Paulo City Hall three times since Brazil’s return to democracy — no small feat, given the city’s more conservative leaning. However, the party continues its downfall, which started in 2016. Candidate Jilmar Tatto, a Lula loyalist, is unknown to most voters and polls at just 1 percent. Many in the party’s top brass have said he should drop out and endorse far-left candidate Guilherme Boulos, who is polling third with 10 percent.
  • Xenophobia as a platform. Two mayoral candidates in the Roraima state capital of Boa Vista, in Brazil’s North, are facing charges of inciting racism. Federal prosecutors acted after the candidates made discrimination against Venezuelan migrants the cornerstone of their campaigns. One used the slogan: “Venezuelans will not have privileges,” while the other promises to “limit Venezuelans’ access to healthcare and education.” Roraima has received an inflow of Venezuelan migrants in recent years, as they flee their country’s full-scale socioeconomic collapse.

What else you need to know today

  • Cabinet. Communications Minister Fábio Faria has tested positive for Covid-19, but has only shown mild symptoms and will continue to work remotely. Mr. Faria took office in June following a cabinet reshuffle, and has quickly become one of the president’s most influential advisors, helping to tame his demeanor and abandon the constant attacks against Congress and the Supreme Court.
  • Bounceback. The São Paulo state government is set to announce its economic recovery plan today, expected to rely heavily on privatizations — something Governor João Doria supported long before the pandemic. Another pillar of the plan will be an austerity package approved by the state legislature, which cuts back on tax breaks and creates a voluntary redundancy program to axe 5,000 civil servant positions.  
  • Top 5 worldwide. After confirming over 15,000 new coronavirus infections and 350 deaths, Argentina became the country with the fifth-highest number of cases in the world, while its death tally is 12th-largest. Argentina was one of the first Latin American countries to respond to the coronavirus pandemic, with the government placing the country under lockdown by March 20 — even before European countries such as Germany. Massive inequality and the prevalence of informal labor, however, made it impossible to fully enforce restrictive measures. 
  • Butt-gate. Senator Chico Rodrigues — caught stashing BRL 30,000 “between his buttocks,” according to the Federal Police — was relieved from his duties as the government’s deputy whip. Moreover, the Supreme Court ordered his 90-day suspension from the Senate, a decision that must be approved by his peers before being enforced. But Mr. Rodrigues seems to be safe from impeachment, at least for now, as the Senate’s Ethics Committee (of which the senator is a member, ironically) is not currently holding in-person sittings.
  • Spread. Only eight of Brazil’s 5,570 municipalities have not recorded a single Covid-19 case — and none of them have more than 7,000 inhabitants. So far, Brazil has registered 5.17 million infections and 152,460 deaths. There are at least 93 potential cases of reinfection being analyzed in the country.[/restricted]
Brazil Weekly

Forget mayors, the House Speaker election is the race that counts

This week, we take a look at the behind-the-scenes moves leading up to February’s election for House Speaker. And the crisis sparked by a divided Supreme Court.

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The election that matters

Brazilians head to the polls on November 15 and 29 to select their new mayors and city councilors, [restricted]but President Jair Bolsonaro has his eyes on another election, which he sees as being much more consequential. In February 2021, members of Congress will vote to pick the new House Speaker and Senate President, and incumbents Rodrigo Maia (House) and Davi Alcolumbre (Senate) cannot run for another term — barring an amendment to the Constitution. Therefore, this clears the path for the government to put forward its own candidates.

The key election. Mr. Bolsonaro’s main interest lies in the House Speaker election, as the leader of the lower house holds all the power to initiate (or block) impeachment proceedings against the president.

  • While the president will officially remain neutral during the election process, he is backing Congressman Arthur Lira, a high-ranking figure from the so-called “Big Center,” a loose coalition of conservative, for-rent parties that now makes up Mr. Bolsonaro’s congressional support base.

Yes, but … Brasília correspondent Débora Álvares reports that, despite enjoying a good relationship with the Big Center as of late, Mr. Bolsonaro still doesn’t trust the congressional establishment — and may pull a curveball in the Speaker’s race. He is considering endorsing Tereza Cristina, the current Agriculture Minister, for the position.

  • Senior government officials told The Brazilian Report that Mr. Bolsonaro believes (rightly so, we may add) that the Big Center’s support is only circumstantial — and a shift in the political mood could see him held hostage to this self-serving group. That’s why he wants one of “his own” in the Speaker’s chair.
  • A congresswoman, Ms. Cristina is the former leader of the Rural Caucus, one of Brasília’s most powerful lobbies. She claims she does not want to leave the cabinet and enter the Speaker election — but she would, if the president asked her to. 
  • Government sources say Ms. Cristina is frustrated with her cabinet colleagues Ernesto Araújo (Foreign Affairs) and Ricardo Salles (Environment), who have helped cause an image crisis for Brazil’s agribusiness — due to attacks on China and recent environmental disasters.

Why it matters. The move, if confirmed, could be seen as a betrayal of the Big Center, a group that has ensured some stability to the Bolsonaro administration. Our sources say that Jair Bolsonaro could compensate Big Center officials by offering them key cabinet positions.

A split Supreme Court

This afternoon, Brazil’s Supreme Court will lose one of its pillars: Justice Celso de Mello, who retires after 31 years on the most prestigious bench of the country. Furthermore, this change will take place as the court undergoes a moment of deep internal division. Two recent events have widened this split between justices:

  • Operation Car Wash. After President Jair Bolsonaro said he had “ended” the task force because “there is no more corruption in the government,” Chief Justice Luiz Fux moved to transfer all trials related to the operation from a five-justice panel — a mechanism to reduce the court’s backlog — to full-court decisions. One of the two panels in the Supreme Court has become known as the “Garden of Eden,” due to its propensity for ruling in favor of defendants, while the chief justice himself is a known supporter of Operation Car Wash. Members of the “garden” reacted badly to the decision, calling it “nonsensical.”
  • PCC gang leader. Over the long weekend, the Supreme Court granted a habeas corpus request to a high-ranking leader of the First Command of the Capital (PCC), the most powerful and widespread organized crime faction in Brazil. The decision, made by Justice Marco Aurélio Mello, was issued after prosecutors failed to renew the prisoner’s preventive detention request. The chief justice overturned the decision within less than 24 hours, by which time the gang leader was already at large. Justice Mello was left disgruntled by the turnaround, saying that “the chief justice is not [his] superior.”

Why it matters. A split Supreme Court can aggravate some of the body’s biggest flaws, notably its lack of consistency and respect for precedent.

  • There is a running joke in Brasília, according to which Brazil has not one Supreme Court, but rather 11 — as each justice plays by their own rules. Never has this seemed so apt. 

Dangers. Meanwhile, the court has been the victim of several attacks — including from radical far-right groups operating under the auspices of the First Family (who ask for the shutdown of the court altogether). With their erratic behavior, justices spare these groups from having to discredit them.


October will be a month for tech IPOs in Brazil. Suno Research recommends investors to take part in broadband provider Triple Play’s offering if prices are up to BRL 14 per share. Triple Play has 75 percent of its network in flagship fiber-to-the-home technology and a strong presence in small- and medium-sized cities, a segment where internet penetration is growing and competitors still rely on outdated network infrastructure.

Natália Scalzaretto

New study ties informal labor to Covid-19 deaths

On multiple occasions, we at The Brazilian Report have explained how Brazil’s (and Latin America’s) highly informal economy contributed to its harrowing coronavirus epidemic. Without minimizing the responsibility of government authorities and their failed response to the pandemic, the truth is that millions of people simply could not afford to socially isolate.

A new study by the Federal University of Rio de Janeiro took five Brazilian cities with different proportions of informal labor and compared their Covid-19 death rates, with the results corroborating the hypothesis that unregistered workers could not stay home. For every additional 10 points in cities’ informality rates, contagion rates rise 29 percent and death rates, 38 percent.

Looking ahead

  • War budget. The government still has no solution for its plan to roll out a new welfare program while simultaneously adhering to the federal spending cap, which prevents the administration from raising public spending without extra revenue. The government is considering extending the so-called “War Budget” until 2021, which was a solution pushed through by Congress to create a parallel budget for coronavirus-related spending, as a way to bypass the cap. Analysts, however, say that using that mechanism for current expenses would create a confidence crisis among markets.
  • Priority list. The November municipal election gives the government practically no time to push through broad reforms in 2020. Instead, the administration will focus on three priorities for Congress: passing the new regulatory framework for the gas sector, opening up the cabotage navigation market, and breaking the monopoly state-owned company Correios has over postal services, thus clearing a path for the firm’s privatization.
  • Infrastructure. Tarcísio de Freitas, Brazil’s Infrastructure Minister, has begun a tour in Congress to gather sponsors for selected projects the administration hopes to push through to completion in 2021. One-third of his ministry’s budget will come from parliamentary grants, by which individual officials request a share of the federal budget to go toward projects in their constituencies. 
  • Vaccine. President Jair Bolsonaro has said on multiple occasions that “nobody can force anybody” to take a Covid-19 vaccine, but Brazilians don’t seem to agree. Over 70 percent of people in four major urban centers (São Paulo, Rio, Belo Horizonte, and Recife) want a vaccine against the coronavirus to be mandatory, once it is available. However, enthusiasm for the vaccine is lower among wealthier classes.

In case you missed it

  • Supreme Court. Celso de Mello, the longest-tenured Supreme Court justice, retires today after 31 years in Brazil’s highest court. He distinguished himself as the court’s most fervent defender of individual liberties and his peers say he will leave big shoes to fill. For his replacement, President Jair Bolsonaro went for Federal Judge Kássio Nunes, who has been endorsed by traditional political parties in Congress. A confirmation hearing is scheduled for next week, and Mr. Nunes already has a majority in the Senate’s Constitution and Justice Committee.
  • Economy. Once heralded Brazil’s economic tsar, Economy Minister Paulo Guedes now seems to be losing prestige by the day. After publicly scolding him on multiple occasions, President Jair Bolsonaro is now considering splitting up Mr. Guedes’ fiefdom into multiple ministries — recreating the Labor Ministry, and possibly the Trade Ministry, as well. That would give the president more horse-trading power with Congress. 
  • Trade deal. In a 345-295 vote, the European Parliament passed an amendment to the common EU commercial policy which was seen as a rejection of the EU-Mercosur free trade agreement signed just last year. The amendment highlights the need for ensuring fair competition and compliance with European production standards — adding that, due to environmental concerns, “the EU-Mercosur agreement cannot be ratified as it stands.”
  • Financial inclusion. PIX, an instant payment platform created by the Brazilian Central Bank, officially opened registrations last week. The number of individual ‘keys’ issued reached roughly 24 million. The new payment system, which will allow for instant cash transfers, begins its operation on November 16. Besides allowing near-instant transfers and payments outside of commercial working hours, the system is free to use for sending and receiving money.[/restricted]

A premature end to Brazil’s debate season

While casting a cursory glance over the U.S. presidential debates of recent weeks, Brazilians could be forgiven for feeling a little smug. The “shitshow” of constant interruptions and rule breaches in both the presidential and vice-presidential showdowns would be unthinkable in Brazil, despite its own penchant for off-the-wall and over-the-top political spats.

Indeed, were the September 29 debate in Cleveland, Ohio between Donald Trump and Joe Biden to have taken place in Brazil, Mr. Trump would have had his microphone cut on several occasions, both candidates would have been granted the right of reply, and they would be flanked by at least half a dozen other competitors representing a selection of Brazil’s 33 (!) political parties.[restricted]

Granted, Brazil’s pluralist approach to political debates is far from ideal, though it is marginally more intriguing than equivalents in the U.S. and the United Kingdom, featuring less than a handful of candidates from never-changing parties. And with municipal elections on the horizon, Brazil is going through its own debate season, which — as has been the case in the Trump v. Biden race — has been cut short due to Covid-19.

One and done

Major cities around Brazil held their first televised mayoral debates at the beginning of October, broadcast by major network Band. However, with a large number of candidates present and increased Covid-19 risks, four broadcasters have canceled their future debates in São Paulo, a decision repeated in several other cities.

Members of campaign teams are resigned to the fact that no more debates will take place — which, in Brazil’s biggest city São Paulo, is seen as favorable to the Bolsonaro-backed frontrunner Celso Russomano.

Candidates driven round the bend in Porto Alegre

One of the strangest solutions was tested in Porto Alegre, the largest city in Brazil’s South region. With a grand total of 13 candidates, local radio station Rádio Gaúcha gathered the whole baker’s dozen into what appeared to be the parking lot of a seedy motel. Each competitor remained inside their own cars — except for Júlio Flores, the candidate for the Trotskyist PSTU party, who was given a lift to the debate and sat in the passenger’s seat — while they fired questions at each other.

Arguably this wasn’t the most glamorous of settings for frontrunner Manoela D’Avila, going from being the would-be vice-president to 2018’s defeated presidential candidate Fernando Haddad to sitting behind the wheel of a Kia Sportage SUV asking for votes.

However, beyond the scripted automobile puns — one candidate was asked if he was prepared for “rough terrain” after turning up in a 4×4 — the debate largely went off without a hitch.

TV network Band went for a slightly more conventional approach in their debate the following week, though kept candidates waiting in a green room-cum-classroom, calling two at a time to ask questions.

The future of the political debate

With Covid-19 drastically changing how politicians are able to campaign, the cancellation of debates may see this long-held institution of pre-election politics be put to bed for good. In the U.S., amid the constant rule-breaking in Trump v. Biden and a fly stealing the show in Pence v. Harris, the electorate may well be wondering whether they are simply better off canceling debates for good.

Indeed, televised debates that are productive in any political sense are very few and even farther between. Platforms and proposals are rarely discussed in any depth or detail, with the content of the debate far more likely to descend into a slanging match or a mutual back-scratching session between allied candidates.

Politicians know that debates are one of the least effective ways to present their proposals and get their points across. Indeed, their main campaigning front has gone online. Candidates in the São Paulo mayoral debate illustrated this perfectly, constantly referring viewers to log onto their YouTube, Instagram, or Twitter feeds for more in-depth explanations.

Clearly, however, scrapping debates altogether is removing a level of accountability to which candidates should be held. In the 2018 presidential election, Jair Bolsonaro floundered during his only debate appearance — at which a television camera spotted crib notes written on his hand, reading “opinion poll, Lula, guns” — and then point-blank refused to attend any future discussions, using his health as an excuse.[/restricted]


Explaining Brazil #128: Elections in the Time of Covid-19

In just over a month, Brazilians will go to the polls to choose their new mayors and city councilors. In previous episodes of the podcast, we have discussed the major sanitary implications these municipal elections may cause. Brazil has no system for mail-in ballots, which we see in the U.S., or vote-by-proxy, as they have in France, and the Brazilian voting system is, by design, a health hazard in coronavirus times. 

But this week, we want to tackle the political implications of the municipal races. For a foreign audience, mayoral races may seem too parochial, but they actually have a significant impact on national politics. And what happens in November 2020 will ripple over until 2022.

Listen and subscribe to our podcast from your mobile device:

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On this episode:

  • Filipe Campante is an associate professor at the Johns Hopkins University School of Advanced International Studies. He is interested in political economy, development economics, and urban/regional issues. His research looks at what constrains politicians and policymakers beyond formal checks and balances: cultural norms, institutions, media, political protest.

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How liberalization paved the way for populists in Brazil

While the rise of populist politicians in the U.S. and Europe attracts significant attention from the media and researchers alike, the drivers of populism taking hold in emerging and developing economies still receive relatively little scrutiny.

But a new working paper, called “Roots of dissent: Trade liberalization and the rise of populism in Brazil,” provides new evidence tracing the rise of populism in Brazil — through both the victory of presidents Luiz Inácio Lula da Silva, in 2002, and Jair Bolsonaro, in 2018 – to regional economic shocks caused by a process of trade liberalization that began in the early 1990s.[restricted]

Both Lula and Mr. Bolsonaro were able to mobilize voters by amplifying divisions caused by these trade shocks and subsequent periods of austerity. However, the two leaders were elected on very different platforms and at diametrically opposed points of the political spectrum.

Economic shocks of the 1990s

In 1990, the government of Fernando Collor de Mello began implementing a vast program of trade liberalization in an attempt to modernize the Brazilian economy. Between 1990 and 1995, import tariffs were reduced from an average of 30.5 to just 12.8 percent. 

This reduction was not equally distributed across regions and sectors, however. For instance, while the level of tariff changes in the agriculture and mining sectors was relatively small, import tariffs for clothing and rubber were cut by over 30 percent — and local producers had to deal with an influx of cheaper foreign products that drove many out of business.

Indeed, with different sectors being more prevalent in certain parts of the country, the impact of tariff changes varied from region to region. Those which saw significant cuts were left more vulnerable to international competition, affecting the labor market and the very structure of their economy. 

This shock led to long-lasting declines in formal employment and wages relative to other regions. The map below shows, for example, that some of Brazil’s largest cities — including Belo Horizonte, São Paulo, and Rio de Janeiro — were highly affected by tariff changes.

Tariff reductions by Brazilian microregion

import tariffs
Regions with darker units faced the largest reductions in the level of tariffs

As our analysis shows, these effects persisted for decades and affected the political preferences of Brazilians. We found that the microregions which experienced the largest tariff cuts in the early 1990s were more prone to vote both for Lula in 2002 and Mr. Bolsonaro in 2018 — despite their profound political differences.

Presidential votes by microregion

Regions with darker colours show the largest shares of votes for Lula (2002) and for Bolsonaro (2018).
Regions with darker colors show the largest shares of votes for Lula (2002) and for Bolsonaro (2018)

The effects of trade reforms were further amplified by periods of austerity that hit Brazil just before the 2002 and 2018 elections. Both Lula and Jair Bolsonaro exploited the effects of austerity and previous effects of the trade shocks by building political agendas that appealed to voters who had lost out either economically or socially from the interaction between these economic shocks.

From left-wing to right-wing populism

But while these economic factors are directly linked to the rise of populism, they don’t explain its different guises. Lula’s left-wing platform was very different from Mr. Bolsonaro’s far-right agenda. This dramatic swing to the left in 2002, and to the right in 2018 can be explained by the different political strategies Lula and Mr. Bolsonaro used to capture sufficiently large constituencies.

On the left, Lula took advantage of the austerity policies of his predecessors in the early 2000s — which led to dramatic rises in inequality — to amplify economic cleavages in society. Lula’s brand of populism resulted in one of the largest social protection programs in the world, and significant reductions in poverty and inequality. 

But these achievements were marred by accusations of corruption and economic mismanagement, for which Lula was convicted and imprisoned between 2018 and 2019.

Populism follows austerity

GDP growth rate (left axis) and social spending (right axis) between 1995 and 2018
GDP growth rate (left axis) and social spending (right axis) between 1995 and 2018

On the right, Bolsonaro took advantage of the austerity policies implemented between 2015 and 2018 by the governments of Dilma Rousseff — Lula’s successor — and Michel Temer, who took office after Ms. Rousseff’s 2016 impeachment. 

Mr. Bolsonaro also played on voters’ feelings of insecurity by promoting a strongman image, strengthening social and cultural divisions, and anti-migration sentiment. His variety of populism has resulted in the reversal of decades of economic development and climate adaptation and one of the world’s largest Covid-19 death rates.

Across the world, the shortcomings of populist agendas in Mexico, the U.S., the United Kingdom, and India, among others, have been laid bare by their failures to contain the spread of infections and death rates caused by the pandemic. 

Yet, the success of populist politicians lies in appealing to existing economic and social divisions. 

Given Brazil’s experience, there are now fears that the entrenchment of populism could reverse decades of development and threaten democracy itself across many other parts of the world.

the conversation brazil article
Originally published on
The Conversation
The Conversation



Tech Roundup: Can WhatsApp curb fake news in the 2020 election?

You’re reading The Brazilian Report’s weekly tech roundup, a digest of the most important news on technology and innovation in Brazil. This week’s topics: Brazil’s efforts to curb misinformation on WhatsApp ahead of the elections, e-commerce performance with Black Friday on the horizon, and the dreadful cybersecurity scenario for Latin America’s company’s and individuals. 

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Electoral courts and WhatsApp team up against fake news. Will it work? 

One and a half months before the 2020 municipal elections, [restricted]Brazil’s Superior Electoral Court launched a new bot, in partnership with WhatsApp, to increase access to reliable information both on sanitary measures and electoral rules. While experts recognize the good intentions of the initiative, they say the fight against misinformation needs broader strategies.

How the bot works. Users must add a number provided by the Electoral Justice system to their list of contacts in order to interact with the bot. Then they will receive messages with information about their polling station, which safety measures to observe when heading out to vote, as well as fact-checked news on the election.

  • There will also be a dedicated channel to denounce numbers that send mass messages during the campaign — which is forbidden by local electoral legislation. This feature, though, will be deactivated by December 19.

Step in the right direction. Débora Albu, coordinator of democracy and technology at think-tank ITS Rio, tells The Brazilian Report that structuring an anti-fake news strategy around WhatsApp — used by almost all Brazilian smartphones — is “very positive.” 

  • “Voters don’t need to leave a platform they already use, they don’t need to create new digital skills. The process is very simple and this is crucial.”
  • Plus, the partnership with Facebook — which owns WhatsApp — points in the direction of a partnership between the public sphere and the private sector that might come in handy during elections. “Unlike 2018, there is now an attempt to join solutions and new initiatives, so you have a unified front,” she said.

Yes, but … Ms. Albu warns the only way to tackle such a complex issue is through a more comprehensive strategy, involving political and media education — something a simple WhatsApp bot cannot handle. 

Regulation. Previously heralded as one of the pinnacles of Congress’s reaction to misinformation, the controversial “fake news bill” remains far from approval.

Digital campaigns. Official campaigns began on September 26, but mayoral candidates launched their online strategies on Facebook, Twitter, and WhatsApp weeks or months ago. 

  • After Jair Bolsonaro won the presidency in 2018 with a campaign almost entirely conducted on social media and WhatsApp group chats, politicians have become obsessed with their online presence. But followers do not strictly translate into votes — and the most engaging candidates on social media are not the ones who are polling the best.
  • “That’s because engagement doesn’t only come from supporters, but also from people who want to confront candidates.”

Brazilian e-commerce losing steam? 

After breaking records earlier in the year, Brazilian e-commerce shrank 9 percent in August, according to data from the Brazilian Chamber for E-Commerce. While sales raised 75 percent more money than in August 2019, year-on-year growth was at 136 percent back in May.

Why it matters. Big retailers have poured millions into improving their online sales channels, but e-commerce sales are decreasing as brick-and-mortar shops reopen.

Capital markets. All of Brazil’s top 4 retailers saw share prices drop by as much as 21 percent in September.

  • Stocks analyst Eduardo Guimarães, of Levante Investimentos, points out that the sector has seen expressive gains over the year. As Nasdaq and Ibovespa lost steam in September, investors saw an opportunity for profit-taking.
  • In Brazil, retail companies such as Via Varejo became favorites among retail investors, which may have caused trading volumes to boom temporarily. “The frenzy has died down a bit,” says Mr. Guimarães. 
  • Institutional investors are betting on e-commerce. BTG Pactual bank replaced traditional retailer Lojas Americanas with Magazine Luiza on its monthly recommended portfolio, saying the latter is “well-positioned to continue growing above the market.”

Challenges. As retailers prepare for Black Friday, Amazon Inc will host its first Prime Day in Brazil on October 13 and 14. Besides being a proxy for the biggest shopping sprees in the year, it could also spell trouble for competition.

Yes, but… It’s not the first time the market has jumped the gun in response to Amazon’s moves. When the American giant announced it was expanding to Brazil, domestic retailers’ stock melted, but Amazon has since taken a very cautious approach to the Brazilian market.

Holiday season. Q4 is traditionally the best time of the year for retailers. “However, sales could be hurt by weak brick-and-mortar sales,” Mr. Guimarães tells The Brazilian Report.

Brazilian companies targeted by cybercriminals

A new report by cybersecurity firm Kaspersky shows that Brazil is home to 56 percent of all cyberattacks in Latin America. From January to September, Kaspersky noted 37.2 million attacks on companies in the continent and another 20.5 million to home users. 

Remote work. The Remote Desktop Protocol (RDP), which allows users to connect to other computers, suffered 517 million attacks in the region. The peak happened in April, coinciding with the beginning of several quarantines in Latin America.

  • “The adoption of remote work made it easier for cybercriminals to attack systems that were not available on the internet,” said Dmitry Bestuzhev, head of Kaspersky’s GReAT team in Latin America.

Vulnerability. Though it is the most targeted, Brazil isn’t the most insecure place. According to the report, Argentina has the highest “coefficient of attack” — the proportion of attacks per capita — for both companies and home users. 

  • However, Brazilians are the most vulnerable to attacks on mobile devices. The country recorded 63 percent of the 1.2 million attacks of this kind reported during the period. 

Take note

  • LGPD. Homebuilder Cyrela was the first company fined on the grounds of the General Data Protection Law in Brazil. The company was found guilty after a customer sued it for being spammed with emails from Cyrela’s partners, evidence that the homebuilder shared his data without consent. Cyrela now has to pay BRL 10,000 in compensation and an extra BRL 300 for every undue attempt to contact the customer.
  • SMB. A new report by consultancy Neotrust/Compre&Confie shows that online sales by small- and medium-sized businesses in Brazil nearly doubled between February and August, bumping revenue by 118 percent. The leading segment was home appliances, with a near 400-percent growth, followed by furniture (+241%), decor (+217%), health (+212%), and cameras and drones (+205%).
  • Acquisition. Bitz, the digital wallet launched by Bradesco a few weeks ago, has already made its first acquisition: buying fintech DinDin for an undisclosed amount. The deal comes as Bitz tries to obtain knowhow to achieve its goal of grabbing a  25-percent market share in digital wallets in Brazil over the next three years. 
  • Startups. Google launched its Growth Academy initiative in Brazil. The ten-week program offers mentorship and teaches growth techniques to startup leaders that already have some market traction. The first edition will be fully digital due to Covid-19 and will include companies such as health food startup LivUp, cosmetics brand Sallve, and pet store Zee Dog. 
  • Digital Ecosystem. Data from think-thank Distrito obtained by newspaper O Estado de S.Paulo shows that large companies purchased 100 startups in Brazil between January and September — the largest number on record. The trend is propelled by digital transformation needs, the urge to launch new business fronts, and the availability of capital due to an environment of low interest rates. 
  • Unicorn. Fintech dLocal became Uruguay’s first unicorn in September, with a USD 1.2 billion valuation. It reached the milestone after a new USD 200 million funding round led by General Atlantic. The company offers payment solutions in Asia, Latin America, and Africa, with high-profile customers such as and Nike. 
  • Crowdfunding. The Brazilian Securities Commission canceled the operating permit of crowdfunding platform Finco Invest after several irregularities, including fraud, acting as qualified investors without having the due certification, and lack of due diligence processes. 
  • Agritech. Sugar and bioethanol group São Martinho teamed up with Ericsson to launch a 5G pilot in one of the group’s sugarcane plantations in São Paulo state. The new network will allow them to connect trucks and machines and speed up the harvesting process from 2021 on. If it works, the partnership will be expanded to other plantations of the group and new products and services both companies aim to offer in the market. 
  • Drones. Food delivery app iFood will test drones to deliver meals in the city of Campinas, in the state of São Paulo. The restaurants will take the food to hubs where the drones are stored. Then, the machines will fly to delivery centers and, from there, couriers will drive it to consumers. iFood believes that, in some routes, the process may shorten delivery times from 10 to 2 minutes. The tests are expected to last for 12 months and, if they succeed, the model may be adopted in another 200 cities.[/restricted]

U.S. presidential election: Jair Bolsonaro votes Trump

This Tuesday, U.S. presidential candidates Donald Trump and Joe Biden presented us one of the worst presidential debates as far as we remember. Called a “shitshow” by CNN journalists covering the election, the tos and fros of the messy discussion was being watched attentively at home by Brazil’s President Jair Bolsonaro. 

While cheering on Mr. Trump, the Brazilian president may have jumped out of his seat when his own country got a mention by presidential challenger Joe Biden. When discussing the environment, the former vice president mentioned the burning of the Amazon rainforest, suggesting the U.S. should give Brazil USD 20 billion to end deforestation, or face “economic consequences.” 

Jair Bolsonaro could hardly contain himself. Running to social media, he posted a shakily translated statement criticizing Joe Biden, suggesting his offer of USD 20 billion was a “bribe” and even mistaking the candidate’s name, referring to him as “John Biden.”

Since his election, Brazil’s president has given little thought to his country’s image abroad. He has started fights with counterparts in Argentina, France, and angered several member nations of the European Union. 

Now, with Joe Biden leading in the polls, Mr. Bolsonaro may just have made an enemy out of the next president of the world’s biggest economy.

What could go wrong?

You should also see:

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Brazil Daily

Brazil’s next Supreme Court Justice?

Jair Bolsonaro’s Supreme Court dark horse. Brazil’s job market situation is a Rorschach test. And Brazil picking a fight with Joe Biden.

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Bolsonaro zeroes in on Supreme Court pick

The government has leaked information that President Jair Bolsonaro intends to choose Federal Judge[restricted] Kássio Nunes, from the northeastern state of Piauí, for a spot on the Supreme Court. A seat will become vacant on October 13, when Justice Celso de Mello — the longest-tenured member in the court’s history — will retire. Mr. Nunes’ name was completely off the radar, with reports suggesting he was not even considering campaigning for the job. Regardless, the potential pick sends some important signals:

  • Mr. Bolsonaro reportedly zeroed in on Kássio Nunes after a meeting with Supreme Court Justices Dias Toffoli and Gilmar Mendes, brokered by Senate President Davi Alcolumbre. By choosing someone who is well regarded in the field of law — and has political connections — the president appears to be extending an olive branch to Congress and the court, which has not pulled many punches in decisions affecting the government.

What the president wants. There are two probes underway in the Supreme Court that could hurt the Bolsonaro family: an investigation into the organization of anti-democratic demonstrations, and the so-called Fake News probe. As Brasília correspondent Débora Álvares reports, the government has tried to negotiate some sort of deal with the court to spare members of the First Family from potential indictment.  

  • Figures close to the president have approached Supreme Court justices with a proposal to hand over the people responsible for coordinating the government’s so-called “Office of Hate” — consisting of a group of aides who firehose falsehoods on social media and incite protests against democratic institutions, in an orchestrated effort operating within the president’s office. In exchange, two of the president’s sons who may face heat (Eduardo and Carlos Bolsonaro) would be spared. The president is also keen on shielding his eldest son, Senator Flávio Bolsonaro, recently accused of money laundering, embezzlement, and criminal association.
  • Mr. Bolsonaro’s aides were told that there is no deal on the table. And the president is apparently trying a less barefaced move to lower tensions with the Supreme Court.

Yes, but … This administration has flip-flopped on multiple occasions, and senior officials left the door open for a U-turn, if necessary, saying the ink is not yet dry on Mr. Nunes’ nomination.

On the outs. Chief Justice Luiz Fux was not happy about being left out of the meeting with the president, and reportedly said that a Supreme Court nominee should have a “thicker résumé.”

Legacy. Kássio Nunes is 47 and thus could stay in the court until 2047, when he would turn 75 and hit the age of mandatory retirement.

Job market remains fragile in Brazil

The Economy Ministry announced on Wednesday that Brazil enjoyed an overall increase of 249,388 new formal jobs in August. This was the second straight month of positive results and the best result for August since 2010. More importantly, it was the first time since the pandemic started that services companies — the backbone of the Brazilian economy, accounting for 70 percent of Brazilian jobs — hired more people than they fired.

Yes, but … On the same day, the Brazilian Institute of Geography and Statistics showed a record-setting unemployment rate: 13.8 million people. As we previously reported, unemployment only accounts for those actively seeking work, meaning the rate is likely to rise as Brazilians leave self-confinement and start to look for jobs once more. 

  • The number of people of working age outside of the workforce has consistently grown since March — and reached an all-time record of 23-percent growth in July.

Recovery. Despite the fragility of the job market, the Brazilian economy is recovering faster than expected. S&P revised its GDP growth projection for the country, from -7 to -5.8 percent in the year. The ratings agency cites three main factors for the swift bounceback: strong financial stimuli, relaxed social isolation rules, and a solid demand for basic products from China.

  • A few points deserve monitoring, however. The coronavirus emergency salary is set to end after December (and the government is struggling to come up with a substitute welfare plan), and the Bolsonaro administration has adopted an aggressive stance against China.

“What a shame, Mr. Biden”

Polls suggest former U.S. Vice President Joe Biden is favored to win against Donald Trump in the U.S. presidential election. Still, Jair Bolsonaro seems determined not to waste an opportunity to get into a feud with the Democratic nominee. The latest such case came after Tuesday’s presidential debate, when Mr. Biden said the U.S. should put pressure on Brazil to take action against deforestation — suggesting to offer USD 20 billion as compensation and impose “severe economic consequences” if Brazil refused.

  • In response, Mr. Bolsonaro ranted on social media, in a message his team translated into English: “Today, [Brazil’s] president no longer takes bribes or baseless threats. OUR SOVEREIGNTY IS NOT NEGOTIABLE (…) What a shame, Mr. John [sic] Biden! What a shame!” 
  • Environment Minister Ricardo Salles issued a sarcastic retort to Mr. Biden’s idea to offer Brazil USD 20 billion to end deforestation. 

Why it matters. Under Mr. Bolsonaro, Brazil has been less of an ally of the U.S., and more strictly speaking an ally of President Donald Trump. If polls are correct and Mr. Trump is unseated, the Brazilian president’s demeanor could harm Brazil’s relations with its second-biggest trading partner — and most powerful nation in the world.

Remember this. Last year, our Explaining Brazil podcast interviewed Harvard professor Stephen M. Walt, who believes that it is only a matter of time until major powers try to stop Amazon deforestation “by any means necessary.” That could include, in a not-so-distant future, economic sanctions or even military operations.

What else you need to know today

  • Stock market. The Ibovespa stock market index slipped nearly 5 percent in September, due to international turmoil and uncertainties around President Jair Bolsonaro’s commitment to the federal spending cap. Real estate firms, financial institutions, and small caps posted the biggest losses during the month. Only two indexes rounded off September in the black: basic materials and real estate funds.
  • Coronavirus. Brazil posted more than 1,000 Covid-19 deaths in a single day for the first time in two weeks — bringing the total death toll up to 144,000. 
  • Human rights. According to a report by the Indigenous Missionary Council, violence against indigenous groups in Brazil more than doubled since Jair Bolsonaro rose to power. In 2019, there were 276 cases of violence against members of native communities — against 110 in the year before. The report claims “the violence is based on a government project that aims to make indigenous lands available for agriculture, mining, and logging.”
  • Banking. State-controlled bank Banco do Brasil has reached a deal with Swiss bank UBS to join forces and create a new investment bank and brokerage firm. This novel institution will be controlled by UBS — which will hold 50.01 percent of voting stock — and operate in Brazil, Argentina, Chile, Paraguay, Peru, and Uruguay, according to a financial statement issued to Brazil’s Securities Commission. UBS was one of the banks exposed by the recent FinCen Files scandal, a transnational journalistic investigation revealing the role of global banks in industrial-scale money laundering schemes.
  • Fintech. Nubank is launching operations in Colombia, after expanding to Argentina in 2019 and Mexico earlier this year. Initially, Nubank will only offer credit card services — which accounts for over 20 percent of all payments in Colombia — but it will eventually roll out its digital bank. With its no-fee model, Nubank hopes to gain popularity in a market where the top 5 banks control over 80 percent of total assets.
  • Business. Coca-Cola is moving its Latin American headquarters from Argentina to Brazil. The beverage company is the latest major corporation to leave the southern country, which has been in recession since 2018. According to new data, 11.6 million people in Argentina are below the poverty line — that is, 41 percent of the total population.[/restricted]

Curitiba mayor admitted to hospital with Covid-19

Rafael Greca, the mayor of the southern city of Curitiba, was admitted to a hospital along with his wife after the couple showed severe Covid-19 symptoms. According to the mayor’s press office, the pair suffered from pneumonia days after testing positive for the coronavirus. Aged 64 and overweight, Mr. Greca is considered an at-risk patient.

The city of Curitiba has confirmed over 43,000 Covid-19 infections and over 1,200 deaths so far.

Mr. Greca is running for re-election this year and was taken to the hospital on his second day of campaigning. His administration enjoys an approval rate of 71 percent, and he is heavily favored to win come November. A recent poll shows him polling over 40 percent — almost 30 percentage points ahead of any other candidate.

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Brazil Weekly

Bolsonaro to make first Supreme Court pick

This week, the frontrunners for a Supreme Court vacancy. The government’s proposal for a new tax. Brazil’s over-reliance on trucks persists.

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Who will Jair Bolsonaro appoint to the Supreme Court?

On Friday, Supreme Court Justice Celso de Mello announced he will retire on October 13, [restricted]ending what is the longest tenure by anyone in Brazil’s highest court, after taking the seat in August 1989. Justice Mello was already set to retire on November 1 — when he reaches the mandatory retirement age of 75 — and his decision to bring his retirement forward 19 days was not trivial, as Brasília correspondent Débora Álvares reports.

  • Justice Mello presides over an investigation into President Jair Bolsonaro, and upon retirement, all his cases would normally be handed over to his replacement … who will be appointed by President Jair Bolsonaro. According to sources within the Supreme Court, Justice Mello’s early retirement put pressure on Chief Justice Luiz Fux to draw lots to determine who will take over the investigation.
  • Regardless, government officials have celebrated the retirement announcement, as Celso de Mello has been among the members of the Supreme Court who has most opposed the Bolsonaro administration. Earlier this year, Justice Mello compared Brazil’s current political situation to the crumbling of the Weimar Republic in Germany, as Adolf Hitler became chancellor.

Why it matters. Justice Mello’s retirement will hand Mr. Bolsonaro his first Supreme Court appointment.

Frontrunners. In May 2019, Mr. Bolsonaro announced he would appoint then-Justice Minister Sergio Moro to fill the first available vacancy in the court. That bridge has been burnt, after Mr. Moro left the government accusing the president of malfeasance. Débora Álvares goes through the leading candidates for the country’s highest court.

  • Ives Gandra Filho. A member of the Superior Labor Court, the uber-religious Mr. Gandra Filho is a favorite among Jair Bolsonaro’s military advisors. He is seen as an “incorruptible” man who donates half of his salary to charity and lives in a small room in a Brasília parish. His father recently said President Bolsonaro has a “legal” way to stage a military coup, as he mischaracterized an article of the Brazilian Constitution.
  • Jorge Oliveira. If the pick is made among Bolsonaro’s sons, it would go to the current Secretary-General — who Mr. Bolsonaro calls Jorginho (“little Jorge”). A lawyer and retired member of the Military Police, Mr. Oliveira has worked for the Bolsonaros for over 20 years, and has a personal bond with the president’s family.
  • André Mendonça. The current Justice Minister is a respected legal scholar, with over 20 years of experience in the Solicitor General’s Office. He would check the box of being “extremely evangelical,” which Mr. Bolsonaro has said will be a prerequisite for a Supreme Court appointment. Moreover, Mr. Mendonça’s actions as Justice Minister showed loyalty to the president — including actions widely disapproved by legal scholars, such as creating a secret dossier with information on almost 600 civil servants and law enforcement agents monitored for being self-declared “anti-fascists.”
  • Other potential picks. Prosecutor General Augusto Aras and João Otávio Noronha, a member of the Superior Court of Justice (Brazil’s second-highest judicial body), are also in contention — albeit in the outside track. They have distinguished themselves to the president by bending over backward to please Mr. Bolsonaro with their legal decisions, in what observers say is an attempt to audition for a Supreme Court seat.

Consequential. Besides Celso de Mello’s seat, Jair Bolsonaro will have at least one more Supreme Court nomination before the end of his term — as Justice Marco Aurélio Mello retires next year. If he wins re-election in 2022, Mr. Bolsonaro would have two more seats to fill, meaning he could have four appointments out of a total of 11 justices.

The government’s plan for tax reform

After weeks of negotiations, the Bolsonaro administration will present Congress with its second set of proposals to reform Brazil’s tax system — which are rumored to include the creation of a new levy. According to the Economy Ministry, a novel 0.2-percent tax on financial transactions is the only way the government can make ends meet in 2021. In exchange, the government proposes a cut in payroll taxes.

  • This need for increased revenue becomes all the more pressing as President Jair Bolsonaro leads the creation of a new welfare program to replace the coronavirus emergency salary, which is set to expire in December. 

Why it matters. The emergency aid has had a tremendously positive impact on Mr. Bolsonaro’s approval ratings (more below). But the cash-strapped government still struggles to structure a new program for 2021 and beyond.

  • The government’s new tax is a new version of the CPMF — a tax on financial transactions which was enforced between 1997 and 2007. Brazilians loath this levy — and the fact that 2020 is an electoral year makes it a tough sell to Congress.
  • President Jair Bolsonaro has reportedly signed off on the new tax — as long as the Economy Ministry finds a way to avoid it harming his public image.

Maia. The government hopes that House Speaker Rodrigo Maia’s vanity could work in its favor. After success in 2019’s pension overhaul, Mr. Maia wants to go down in history as the Speaker who managed to approve two major reforms in as many years. But Mr. Maia — who is weighing up running for governor in Rio de Janeiro in 2022 — might not be so keen on attaching his name to such a reviled tax.

  • According to sources in Congress, Mr. Maia is likely to lend his support to another tax reform bill being discussed in the House. This proposal merges several federal and state taxes into a single VAT charge.

Calendar. Don’t expect major reforms in 2020. Activity in the House will decrease, as members engage in local electoral races. And contentious reforms usually take several months to pass, even in a best-case scenario. 


Global banks saw their share prices plummet last week, after a journalistic investigation showed that major institutions had engaged for years in knowingly handling up to USD 2 trillion in dirty money. In Brazil, however, banks’ share prices went up. Analysts are particularly keen on the state-controlled Banco do Brasil — which has seen profits soar in recent years, as well as having a conservative portfolio focused on payroll and agribusiness loans, and hefty provisions in case delinquency rates go up.

Natália Scalzaretto

Road transportation still massive bottleneck for Brazil

A new study by the Infrastructure Ministry shows that most of the ethanol, biodiesel, and jet fuel produced in Brazil is still transported by road. That’s why, in 2018, an 11-day truckers’ strike nearly halted the country and caused a fuel shortage in several states. Since 2016, the federal government has tried to map cargo transportation bottlenecks and opportunities, in order to structure the sector through popular cargo routes, identifying where investments are needed — and how to avoid exposure.

Looking ahead

  • Unemployment. On Tuesday, the Economy Ministry will publish August’s formal employment data; on Wednesday, the Brazilian Institute of Geography and Statistics releases the official unemployment rate until July. Government data showed a positive balance between formal hirings and firings in July, but analysts are cautious to treat the data as a sign of a recovery. Unemployment rates are going up as Brazilians begin to leave social isolation — and millions are now falling into another category: discouraged workers, i.e., when people stop looking for jobs in the belief they won’t find one.
  • 2020 election. Even though voting is mandatory in Brazil, voters may ignore their duty if they justify their absence at the polls — or pay a fine worth less than USD 1. Since the return of democracy in 1985, abstention rates have climbed election after election, and a recent poll suggests that voter turnout could be historically low in 2020, as a result of the pandemic. Pollster Datafolha says 34 percent of São Paulo voters don’t feel safe to go out and vote on November 15. Furthermore, Brazil doesn’t have a mail-in ballot system like the U.S., or a vote-by-proxy system, like France.
  • Coronavirus. Three weeks after the September 7 Independence Day holiday, Rio de Janeiro saw a spike in ICU occupancy rates, which now stand at 87 percent — nearly 10 percentage points above July levels. Experts say the uptake in admittance of patients with severe Covid-19 cases might be linked to the loosening of social distancing observed during the holiday, with thousands flocking to beaches, bars, and restaurants.

In case you missed it

  • Bolsonaro. A new poll by Ibope shows that 40 percent of Brazilians believe Jair Bolsonaro is doing a ‘good or great’ job as president. Mr. Bolsonaro gained ground among poorer and less-educated voters, suggesting that the BRL 600 (USD 107) emergency coronavirus salary has made him more popular. However, interviews were made before the benefit was halved to BRL 300.
  • Economy. Many industrial sectors have regained their optimism toward the Brazilian economy, according to a preliminary study by the Brazilian Institute of Economics at Fundação Getulio Vargas (IBRE-FGV). “This optimism signals that productive sectors may ramp up production,” writes economist Renata Mello Franco.
  • Borders. The Brazilian government has lifted restrictions on the entry of foreign nationals at every airport in the country — revoking a March rule that barred the influx of tourists in six states. A 30-day restriction remains for the entry of foreigners by land and sea. Venezuelan citizens, however, are granted an exception due to humanitarian reasons.
  • UN. Jair Bolsonaro’s address to the United Nations General Assembly tried to deflect responsibility for Brazil’s environmental crisis and the coronavirus pandemic. The president lashed out at indigenous communities, “spurious” international interests, and “unpatriotic” organizations for leading a “brutal smear campaign” against Brazil — denying official data that shows a massive surge of fires and deforestation since he took office.
  • Rio. On Wednesday, the State Congress in Rio de Janeiro moved forward with its impeachment process against Governor Wilson Witzel, who is accused of embezzling funds earmarked for the state’s anti-coronavirus effort. One day later, an electoral court declared Rio’s Mayor Marcelo Crivella ineligible for office for committing electoral crimes. However, Mr. Crivella may still be able to run for re-election in November, thanks to the possibility of dragging the case through multiple appeals.[/restricted]

2020 Election: What is at stake in São Paulo and Rio

Brazil’s mid-term municipal elections are often seen by parties as a dress rehearsal for national races. History suggests that local disputes often anticipate trends that we will observe two years later, when presidential and gubernatorial candidates square off. In 2020, the municipal election will be as national as ever, with all the main presidential hopefuls using the November 15 vote to set up alliances that could carry them over the finish line in 2022.

In this game, São Paulo and Rio de Janeiro are disproportionately important, as the country’s two most-populated and wealthiest cities — with a combined GDP of nearly BRL 1 trillion (USD 190 billion), or 10 percent of the Brazilian economy. These two cities alone, account for over 9 percent of the Brazilian electorate.

Both races, however, are up in the air, less than two months before Election Day. We explain what is at stake in each of them.[restricted]

Key points in the 2020 election

  • While reelection rates are extremely high in state and national races, the same doesn’t happen for municipal disputes. The percentage of mayors who were granted a second term has continually decreased since 2008 to an all-time low of 21 percent in 2016.
  • The Brazilian Social Democracy Party (PSDB) will try to preserve its dominance in major urban centers. Of Brazil’s biggest 96 cities, the PSDB is the ruling party in 30 of them. That is thanks to its continuous shift towards a “hard right” after leaving power in 2002 (especially on crime-related issues) and consolidating itself as the main opposition force against the Workers’ Party until Jair Bolsonaro emerged on the national scene. It remains to be seen how the rise of  Mr. Bolsonaro will disrupt PSDB’s prestige among conservative voters.
  • Meanwhile, the Workers’ Party is toothless and its power resides in smaller, poorer cities. Back in 2008, when then-President Luiz Inácio Lula da Silva had 80-percentish approval ratings, the party snatched up 25 of the country’s 96 biggest cities — more than any other political group. But in the 2020 election it held none of these cities. Both in São Paulo and Rio de Janeiro, however, the party has picked veteran candidates who lack the capacity to galvanize its own militants, let alone disillusioned voters in two cities where the Workers’ Party has become a bogeyman for large parts of the electorate.
  • We also must keep an eye on what role President Jair Bolsonaro will play in the election. As we anticipated in September 15 Daily Briefing, the president has refrained itself from publicly endorsing any candidate before the runoff stage, but is engaged in backstage negotiations with the goal to hurt his political enemies — i.e. the Workers’ Party and former Health Minister Luiz Henrique Mandetta. However, as a Bolsonaro aid told The Brazilian Report, “the president is unpredictable, and could decide to do a photo op with a candidate of his choice out of the blue.”

São Paulo’s mayoral race

The São Paulo mayoral race still has no clear-cut favorite, according to consultancy Atlas Político. The first major poll of this electoral cycle shows incumbent Mayor Bruno Covas polling at 16 percent — with left candidate Guilherme Boulos and Congressman Celso Russomano tied in second place, with 12 percent each. Meanwhile, 13 percent of voters in Brazil’s largest city still don’t know who they will vote for in November. 

Mr. Covas apparently has the inside lane, but it remains too early to slap him with the favorite tag. With the pandemic, the election has remained as a background subject — and early polls usually reflect more name recognition rather than popularity. He is backed by Governor João Doria — who has been quite open about his own presidential ambitions. A display of strength in São Paulo could help enhance his profile with voters outside of his home state.

Meanwhile, Mr. Russomano has tried all sorts of alliances over the past few weeks, but has come out still empty-handed. Still, he enjoys Mr. Bolsonaro’s sympathy — and could have his support should he reach the runoff stage, which is far from a certain thing. “Celso Russomano usually has strong polling numbers at the start of the mayoral race, but then his candidacy loses steam,” says Cristiano Noronha, a political scientist at consultancy Arko Advice. 

“However, support from Jair Bolsonaro could change his fortunes.” In 2018, the president won 60 percent of São Paulo votes in the runoff election.

The race in Rio de Janeiro

It is no overstatement to say that Rio de Janeiro is facing a municipal election while it descends further and further into a true political hell. Mayor Marcelo Crivella has just escaped his fifth impeachment, amid investigations that he ran a mafia-like scheme within City Hall to embezzle public funds — and launder money through evangelical churches.

But corruption allegations are not even the biggest obstacle in Mr. Crivella’s way. His administration has been rated as “disastrous” by most observers, and only 14 percent of voters approved of his job, according to a March 2020 poll. The city is nearly bankrupt, and most basic services are subpar at best. For 68 percent of voters, the municipal healthcare system is the city’s biggest problem — topping by far concerns about urban violence. 

Don’t expect any push for renewal in Rio, as the race’s head-and-shoulders favorite is Eduardo Paes, Mr. Crivella’s predecessor, who is vying for a third term as mayor. However, he has been recently accused by state prosecutors of pocketing BRL 10.8 million from construction group Odebrecht during his 2012 re-election campaign. He dismissed the probe as an attempt to interfere with the upcoming municipal elections.

But even Mr. Paes has not been able to excite voters. His leading 19-percent polling is below the 22 percent of voters who intend to spoil their ballots on November 15.[/restricted]

Brazil Daily

Two months until Election Day: what is at stake

Today, what you need to know about the election season. The devastation of the Pantanal wetlands. And why you shouldn’t expect reforms in 2020.

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Election countdown: 60 days

In exactly two months, Brazilians in 5,568 municipalities will elect new mayors and city councilors. [restricted]Last week, we explained the country’s plan to hold safe elections during a pandemic. Now, we explain what will be at stake on November 15.

Why it matters. While the themes of municipal elections are local, these races have become increasingly important for national politics, and will set the stage for the 2022 general elections.

  • It doesn’t mean the 2020 election will be a prediction of what will happen in 2022. In politics (especially in Brazilian politics), two years has proven to be a long time.

How the election board is set. The Brazilian Social Democracy Party (PSDB) has the strongest foothold in major centers, with controlling 30 of Brazil’s 96 biggest cities. The party rose in the local elections thanks to a growing anti-leftist sentiment among voters in 2016 — until Jair Bolsonaro emerged, the PSDB was the major conservative force in Brazil. 

  • On the left, meanwhile, the Workers’ Party does not govern a single municipality among the top 96, it is stronger in smaller, poorer cities.

Bolsonaro. At least publicly, President Jair Bolsonaro says he will refrain himself from taking part in municipal races. However, his aides confirmed to Brasília correspondent Débora Álvares that the president will use his newfound popularity to influence the outcome of elections in São Paulo (which has the biggest budget in the country), Rio de Janeiro (his electoral home), as well as other major urban centers, such as Porto Alegre (1 million voters) and Belo Horizonte (1.9 million).

  • The president, however, “will only enter disputes he knows he can win,” said an adviser. “That’s why his plan is to wait until the runoff stage to make endorsements. That way, he can pick whoever has the best chances of winning.”
  • Mr. Bolsonaro’s main goal is to use the election to weaken his political nemeses: São Paulo Governor João Doria, former Justice Minister Sergio Moro, former Health Minister Luiz Henrique Mandetta — and, of course, former President Luiz Inácio Lula da Silva and his Workers’ Party. 

Left. The Workers’ Party has a lot at stake going into the elections. Since the 2014 election, the biggest party of the Brazilian left has lost support in all regions except for the Northeast. “We have hit rock bottom,” former Justice Minister Tarso Genro, one of the most independent voices within the party, told The Brazilian Report. “The Workers’ Party faced its darkest hours during the peak of Operation Car Wash. But it has proven it is a durable and politically strong institution that can lead an effort to unite the left.”

  • There is some unity forming on the left, but it hasn’t included the Workers’ Party so far. The Democratic Labor Party (PDT) and the Brazilian Socialist Party (PSB) have forged alliances in 45 big and medium-sized cities (including eight state capitals). It could be a dress rehearsal for a national alliance in 2022 — which could weaken a Workers’ Party-led presidential ticket.
  • Moreover, the party is poorly positioned in São Paulo — with even far-left candidate Guilherme Boulos, from the Socialism and Liberty Party (PSOL) outpolling the party’s nominee, Jilmar Tatto.

The Pantanal drama

pantanal fires deforestation
Photo: Mayke Toscano/Secom/MT

The federal government has declared a state of emergency in the state of Mato Grosso, as wildfires continue to devastate the Pantanal biome. The government of neighboring state Mato Grosso do Sul has also declared a state of emergency. Until Sunday, 14,500 fires were recorded in the region this year — destroying 17 percent of the entire biome. An area bigger than the entire territory of Israel has been damaged in 2020 alone.

Why it matters. The Pantanal is the largest wetland region in the world, home to over 2,000 registered plant species and over 1,000 animal species — some of which only exist there.

  • The region also has one of South America’s main basins. “The region has an enormous capacity to absorb carbon‚ which makes it even more important in the context of climate change,” says Geraldo Damasceno Jr., a professor at the Biology Institute at the Federal University of Mato Grosso do Sul.

Causes. Besides rampant deforestation, the region has suffered from one of the worst droughts on record. Water levels in June — the peak of the wet season — were the lowest in 47 years.

Tourism. The fires will also affect the tourism industry — already ravaged by the pandemic. And tourism in the Pantanal has not only economic importance, but also has been a means to preserve wildlife. One such example is the Encontro das Águas State Park, a reservation where jaguars are protected. Around 62 percent of the park has already burnt down.

Budget. Despite the spike in deforestation rates, the Environment Ministry has reduced the funds earmarked for protection agencies.

Photo: Lucas Ninno/TBR

No time for reforms in 2020

Government leaders in Congress advertised the idea that it is possible to approve major pro-market reforms in 2020. But history says otherwise. According to a study by think tank Metapolítica, the median time frame for lawmakers to pass constitutional amendments is no less than 246 days. It takes even longer during election years such as 2020: 327 days.

Why it matters. Just like last year, many of the projections about how amendments will progress in Congress seem to be the product of wishful thinking rather than actual analysis.

Why is it so hard? Constitutional amendments require 60-percent majorities and must undergo two rounds of voting in both congressional chambers. It takes a lot of negotiating in a system as fragmented as Brazil’s. And negotiation hasn’t exactly been the forte of this administration.

  • That being said, the 2019 pension reform passed quickly, in relative terms. But it was much more consensual among political elites than a tax reform — which will put many conflicting interests against one another — or an overhaul of civil service — which will enrage one of the strongest lobbies in Brasília.

What else you need to know today

  • Interim no more. For the past four months, Army General Eduardo Pazuello has been Brazil’s Interim Health Minister — but on Wednesday he will finally have the interim tag removed from his job title. His tenure has been heavily criticized by experts, who have denounced his poor management of the ministry’s funds. He also faces criticism for signing off on chloroquine purchases by the administration — an antimalarial drug touted by President Jair Bolsonaro as a “possible cure” for Covid-19, but with absolutely no proven benefits.
  • Covid-19. The coronavirus has so far killed 132,000 Brazilians. A study by the Institute for Applied Economic Research (Ipea) argues that the pandemic — the single deadliest event in the country’s history — has lowered Brazilian males’ life expectancy from 72.5 to 71.5 years. Men account for almost two-thirds of Covid-19 casualties in Brazil. Economist Ana Amélia Camarano, who conducted the study, says the impact wasn’t bigger because 75 percent of those who have died were aged 60 or older.
  • Vaccine. Phase-3 trials of a potential coronavirus vaccine developed by the University of Oxford in partnership with British-Swedish pharmaceutical company AstraZeneca will double the number of Brazilian volunteers to 10,000. “With more volunteers, we increase the chances of proving the efficiency of the vaccine sooner,” said Sue Ann Costa Clements, who coordinates the trials in Brazil. The study had been suspended last week, after a UK patient showed adverse reactions to the vaccine, but resumed on Monday.
  • Car Wash. Prosecutors presented new money-laundering charges against former President Luiz Inácio Lula da Silva. He is accused of accepting bribes from the Odebrecht construction group in exchange for hefty government contracts. Lula has accused Operation Car Wash of conducting a witch hunt against him, and said the probe uses “illegal methods” to reach political goals.
  • Rio de Janeiro. The Federal Prosecution Office charged Wilson Witzel, the suspended Rio Governor, his wife Helena, and ten others for criminal association. The group allegedly embezzled funds originally earmarked for the anti-coronavirus fight in the state. Mr. Witzel denies any wrongdoing and said the charges are a political stunt. Next week, state lawmakers vote on whether to continue with impeachment proceedings against the suspended governor.[/restricted]

Numbers of the week: Sep. 12, 2020

This is Brazil by the Numbers, a weekly digest of the most interesting figures tucked inside the latest news about Brazil. A selection of numbers that help explain what is going on in Brazil. This week: food inflation; coronavirus transmission rates; GDP; corruption; aviation woes; São Paulo mayoral race.

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19.2-percent inflation

Brazil’s overall inflation rate sits at a mere [restricted]0.7 percent since the beginning of the year, on pace to finish 2020 far below the government’s 4-percent target. But Brazilians are beginning to feel the rise in food prices, which fuels the growing pessimism about the economy. Tomatoes are now 13 percent more expensive and milk prices have jumped by nearly 5 percent since the start of the pandemic. And rice prices are an astounding 19.2 percent higher than they were in January.

Food prices weigh disproportionately on the poor and could spark disgruntlement among a significant proportion of the electorate.

1.02 R number

New data from the Imperial College London suggests that the spread of the coronavirus hasn’t slowed down in Brazil. The country’s R number (representing the rate of the virus’s effective reproduction) has risen once again, landing exactly on 1.02. The rate has oscillated quite a bit recently. Last week, it sat at 0.94.

The overall death and infection curves are slowing down in Brazil, but that’s mainly because pandemic has spread unevenly across Brazil. While major centers show some stabilization in cases and deaths, regions in the interior of the country are seeing an uptake in infections.

-5.8-percent GDP growth

After encouraging economic data from Q2, Fitch Ratings changed its estimate for Brazil’s 2020 GDP growth rate from a 7-percent plunge to a 5.8-percent drop in the year. The credit rating agency sees a steady reopening of the economy despite the virus’s continuous spread. Among the data that supported Fitch’s decision was the rebound in retail, which suggests that “fiscal transfers to support the vulnerable population and the reopening of the economy have helped to support domestic demand.” 

However, they warn about the risks posed by an intensification in the virus’ spreading which could lead to another lockdown. Read more.

BRL 10.8 million from Odebrecht 

Former Rio de Janeiro Mayor Eduardo Paes was charged this week with corruption and money laundering. Prosecutors accuse him of pocketing BRL 10.8 million from construction group Odebrecht during his 2012 re-election campaign. Mr. Paes plans to run for City Hall again in November, and has dismissed the probe as an attempt to interfere with the upcoming municipal elections.

USD 2.45-billion loan

A U.S. bankruptcy judge denied a USD 2.45-billion bankruptcy loan to Chilean-Brazilian carrier Latam Airlines, Latin America’s biggest airline. The proposal consisted of a USD 1.3-billion loan from asset management firm Oaktree Capital and a USD 900-million convertible loan from key shareholders. The court found the convertible loan would amount to “improper” treatment of other shareholders. The denial is a major setback to Latam, which is carrying USD 18-billion debt and desperately needs short-term liquidity.

Polling at 16 percent

The São Paulo mayoral race still has no clear-cut favorite, according to consultancy Atlas Político. The first major poll of this electoral cycle shows incumbent Mayor Bruno Covas polling at 16 percent — with left candidate Guilherme Boulos and Congressman Celso Russomano tied in second place, with 12 percent each. Meanwhile, 13 percent of voters in Brazil’s largest city still don’t know who they will vote for in November. 

Only 16.6 percent of voters approve of the Bruno Covas administration — he took office last year, after then-Mayor João Doria resigned to run for governor. Meanwhile, 45 percent of São Paulo residents rate the administration as “bad” or “terrible.”


Brazil Weekly

Brazilian Supreme Court to get a new Chief Justice

This week, we cover a major change at the Supreme Court. Brazil’s most valuable brands. And Jair Bolsonaro re-election prospects.

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A big change at Brazil’s Supreme Court

On Thursday, the Brazilian Supreme Court will have a new chief justice in [restricted]Luiz Fux, who takes over the reins from Justice Dias Toffoli. Brasília correspondent Débora Álvares says Justice Fux is set to take on a less politicized approach to the position than his predecessor, who tried to act as a buffer between the federal government and Congress.

How it works. In Brazil, unlike the U.S., the Chief Justice position is rotative. The leader of the court serves a two-year term and steps down, being replaced by the Associate Justice who has served most time in the court without being Chief Justice.

Why it matters. The Chief Justice has agenda-setting powers, and can decide whether or not to bring to trial cases with major political repercussions. In recent months, the court has clashed with President Jair Bolsonaro on numerous occasions. 

Who is Luiz Fux? The first Jewish justice in the history of the Supreme Court, he was nominated by former President Dilma Rousseff and inaugurated in March 2011, after a stint as a prosecutor and serving a decade in the Superior Court of Justice (Brazil’s second-highest judicial body). Despite his reputation as a “good political interlocutor,” as sources describe him, Justice Fux won’t follow his predecessor in bending over backwards to try to nurture a good relationship with Brazil’s volatile president.

  • “Under Mr. Fux, the Supreme Court should have a strictly formal relationship with the Executive branch,” a fellow justice told The Brazilian Report.
  • Justice Fux is one of the main defenders of Operation Car Wash in the Supreme Court, and is only expected to bring cases related to the anti-corruption probe “when the climate is favorable,” sources told Débora Álvares. Infamously, Car Wash investigators declared in a leaked text conversation, revealed by The Intercept, that “in Fux we trust.”

Controversy. Justice Fux is a discrete judge and, unlike some of his peers, doesn’t use his votes on cases to score points against other justices. Still, his résumé includes some controversies. None was bigger than a 2012 report claiming that he hinted to government officials he would reward a Supreme Court nomination with verdicts in favor of the administration. 

  • The Workers’ Party government was facing what was at the time the biggest trial in Brazilian political history — when 40 politicians and bankers were on trial for operating a vote-for-cash scheme in Congress known as the “Mensalão Scandal.” Many of Mr. Fux’s votes, however, were against the people he had allegedly promised to protect.

Legacy. Justice Dias Toffoli ends his two-year term as the chief justice with a legacy widely considered as “extremely negative” even by his peers. One of them told Brasília correspondent Débora Álvares that he put the Supreme Court “in an unacceptable position of subservience” to the government — he went as far as describing the 1964 military coup as a “movement” just so he wouldn’t ruffle any feathers within the strongly pro-dictatorship administration.

  • Perhaps his lowest moment came on May 7, 2020, when the president marched from the presidential palace to the Supreme Court building, flanked by Economy Minister Paulo Guedes and several business owners. The group asked the court to revert a previous ruling that social isolation measures were under state jurisdiction. At the time, governors were attempting to enforce quarantines, while Mr. Bolsonaro was agitating people to go about their business as usual.
  • While justices generally agree that the president placed the chief justice in a terrible position, two of them told The Brazilian Report Mr. Toffoli “failed to assert the court’s authority” by hosting the group and giving it voice. Justice Fux is not expected to appease the government if faced with a similar situation.

Fake news probe. From a broader perspective, the most controversial part of Mr. Toffoli’s legacy might be a probe investigating the production and spread of false information online for political purposes. Many say the Supreme Court is overstepping its bounds and acting as judge, juror, and executioner — the court launched the investigation and is now conducting the probe, as well as being responsible for issuing the verdicts.

  • When the probe was launched, in March 2019, many from the left and right called it a move straight out of the dictatorial playbook. But as investigators began zeroing in on pro-Bolsonaro supporters, outrage waned within the left.

Brazil’s most valuable brands

Kantar and communications group WPP presented their most-recent Brandz Brasil ranking of the country’s top 25 most valuable companies. Despite the coronavirus crisis, these major Brazilian companies had a combined 4-percent growth in brand value.

Biggest growth. Beer and banks continue to dominate the rankings, but the retail sector also saw significant gains, with a 72-percent growth in brand value from last year. That put Magazine Luiza in the 4th position (the company alone increased its brand value by 124 percent). Supermarket chains Pão de Açúcar, Extra, and Assaí also saw triple-digit growth over the period: 187, 219 and 192 percent, respectively.

Main takeaways. “Brands which invested in increasing clients’ digital experience earlier managed to have a better performance,” says Silvia Quintanilha, a vice president at Kantar. 


Investors are paying close attention to Brazil’s cellulose sector. With state-owned bank BNDES wanting to sell its stake in sector giant Suzano, packaging producer Irani has become the new belle of the ball. Brokerage firm XP Investmentos gives Irani a “buy” recommendation, with a BRL 8.50 target price. Analyst Yuri Pereira says the company has good exposure for the food industry — which is still growing during the pandemic — and expects a surge in demand for packages.

Natália Scalzaretto

Pandemic doesn’t dent Bolsonaro’s electoral stock

A recent survey by renowned pollster Ibope shows that 33 percent of Brazilians hold President Jair Bolsonaro responsible for the coronavirus crisis in Brazil. The country has recorded the third-highest number of infections (4.1 million) and second-highest death count (127,000). However, a recent poll conducted by Ideia Big Data still suggests that Mr. Bolsonaro would win re-election against every other candidate, including former President Luiz Inácio Lula da Silva — who all but launched himself as a presidential candidate, putting himself “at the service of the country” in a speech delivered last night, despite being ineligible for office due to his conviction for passive corruption and money laundering.

One piece of data helps explain why: 65 percent of voters believe the president is the guy responsible for the coronavirus emergency salary, which has kept tens of millions from falling below the poverty line and even reduced extreme poverty rates in Brazil.

It remains far too early to predict the 2022 race, but the data shows just how important cash-transfer policies are in Brazil. Especially in a moment like this unprecedented crisis.

Looking ahead

  • Recovery. Two pieces of data will help assess how the Brazilian economy is recovering from the Q2 2020 9.7-percent GDP drop. On Thursday, the official inflation rate for August will be published — and analysts expect the IPCA index at 0.35 percent. However, increases in food prices could complicate matters. Also on Thursday we will have data on retail sales in July, which could influence share prices of Brazil’s sector giants (Magazine Luiza, Via Varejo, B2W).
  • Telecommunications. A shareholders’ meeting will vote today on Oi Telecom’s proposal to alter its court-supervised recovery plan. The proposal includes selling mobile networks, towers, data centers, and part of the company’s optic fiber network — to raise BRL 22 billion for debt repayments and investments. While major bondholders are in favor of the move, Oi’s main creditors — Brazil’s top banks — are attempting to block it.
  • Justice. Lawmakers will demand House Speaker Rodrigo Maia to reopen the works of a special committee to analyze the constitutional amendment proposal to legislate for the possibility of allowing defendants to go to jail after a single failed appeal. Congress has begun discussing that last year, shortly after a 6-5 Supreme Court majority decided that defendants can only be arrested after all appeals are exhausted. One of the results of the Supreme Court decision was the release of former president Lula da Silva.
  • Education. Starting today, schools in the state of São Paulo are allowed to provide tutoring services and sporting activities to students. The authorization applies to cities in an advanced reopening state, with flattening or descendant infection curves. A recent survey shows that 72 percent of Brazilians believe classes should only be resumed after a coronavirus vaccine is available.

In case you missed it

  • Budget 2021. Last week, the federal government presented its budget proposal for 2021. Among the highlights are the cuts to the Health Ministry’s funding to BRL 136.7 billion (USD 24.9 billion) — even less than the BRL 138.9 billion expected before Covid-19 arrived in Brazil. Meanwhile, the budget for investments in 2021 is slated to be BRL 28.6 billion — 56 percent more than what was expected for 2020.
  • Optimism 1. According to the Brazilian Institute of Geography and Statistics (IBGE), 37 percent of Brazil’s 3 million-plus companies still felt the negative effects of the pandemic by the end of July. Still, a major improvement has been recorded from June, when 62 percent of companies reported feeling the negative effects of the crisis.
  • Optimism 2. A survey by pollster PoderData shows that 45 percent of Brazilians expect the country’s general outlook to improve within the next six months — with only 20 percent saying things will get worse. Confidence levels seem to be linked to support for President Jair Bolsonaro, as the demographics that make up his base (males, elderly citizens, people from the South of Brazil) register the highest rates of optimism.
  • Window protests. Pot-banging protests — which took place on a nightly basis during the beginning of the pandemic, but then faded away — were once again heard in at least six state capitals as President Jair Bolsonaro addressed the nation in a televised speech. He talked about being committed to democracy, while praising the 1964 coup that inaugurated a 21-year military dictatorship in Brazil. Rather predictably, at no point did the president mention Covid-19.
  • Coronavirus. One pioneer study headed by the Federal University of Rio de Janeiro documented the case of a woman who remained infected with the virus for 152 days — the longest infection period recorded in the world. Identified as “Patient #3,” she presented mild symptoms for only three weeks, but the virus stayed in her body for five months, being able to multiply and contaminate others. The study could help researchers understand how asymptomatic patients spread of Covid-19.
  • Vaccination. For the first time in 20 years, Brazil hasn’t met immunization goals for any of the vaccines recommended for infants of up to one year old. Vaccination rates have been declining over the past few years, but the pandemic has worsened the trend. Experts warn about the risks of outbreaks of diseases which had been thought eradicated — such as polio or measles.[/restricted]

Left wing has no response to Bolsonaro’s popularity surge in poor areas

Though his administration was plagued with multiple corruption scandals, former President Luiz Inácio Lula da Silva remains one of Brazil’s most popular politicians. His detractors claimed his support was a byproduct of wealth transfer policies, which they dismiss as ‘cash-for-votes’ schemes. Lula’s followers, on the other hand, claim this evaluation is classist and argue his popularity is down to an ensemble of progressive policies, particularly in Brazil’s poor Northeast — the only region of the country where Jair Bolsonaro lost in the 2018 election.

Now, however, Mr. Bolsonaro’s popularity is on the rise in the Northeast, according to several opinion polls, leaving Lula’s supporters dumbstruck. This rise in approval coincides with the creation of the coronavirus emergency salary in March, which paid a BRL 600 (USD 110) monthly stipend to unemployed and informal workers, preventing tens of millions from falling below the extreme poverty line.[restricted]

According to pollster Datafolha, opposition to Mr. Bolsonaro in the Northeast declined significantly, from 52 to 33 percent. Another poll, by DataPoder360, suggests that his supporters in the region now outnumber his detractors — something unthinkable just a few months ago.

On Twitter, supporters of the Workers’ Party appear flabbergasted that voters would rather back Mr. Bolsonaro’s government in exchange for monthly cash transfers, despite his open bigotry against vulnerable groups and the government’s attacks against public institutions.

In light of these polling numbers, the Workers’ Party central committee had to tell governors in the Northeast to “find a way to counter” Mr. Bolsonaro’s advances in the region.

“The first mistake on the left was believing that Lula’s popularity came from his charisma, popular roots, and progressive agenda. But voters in Brazil do not act based on ideology, but rather based on their most immediate needs. And in a country as unequal as Brazil, can you blame them?,” argues sociologist Carlos Melo, a professor at the São Paulo-based Insper Business School.

Interestingly, the government was initially against the coronavirus aid program — having proposed just one-third of what is being paid to informal and unemployed workers, single mothers, and vulnerable populations. But the administration has excelled in reaping the benefits of the initiative, even though Congress arguably had a bigger hand in ensuring it was approved.

Lula and the left still have no strategy to fight Bolsonaro

The Workers’ Party — which is still the largest political organization on Brazil’s left — lacks coordinated action to counter Mr. Bolsonaro’s government. The opposition has been toothless since he took office, and the Workers’ Party has so refused to join or create any effort into building a broader opposition front.

“Their calculation, according to a top adviser within the party, is that they retain at least 30 percent of the electorate. That would be enough to take the party to the runoff stage in 2022, and anti-Bolsonaro sentiment would take care of winning the race for them,” Mr. Melo tells The Brazilian Report. “It is the same mistake they made in 2018,” he adds.

But the effects of the emergency salary shows that money can, in fact, buy you love. Meanwhile, Workers’ Party supporters are left to place their hope in the perverse calculation that its prohibitive BRL 50-billion-a-month price tag will make the aid impossible to sustain, and that a whiplash effect to Mr. Bolsonaro’s popularity will occur when payments are cut or halted.

“This surge in popularity has a lot to do with the government’s intense propaganda to take ownership of a policy it didn’t create,” says Senator Humberto Costa, the opposition whip in the Senate. “The aid program will soon end. The economic crisis will worsen, unemployment rates will spike.”

Senator Rogério Carvalho, who, like Mr. Costa, belongs to the Workers’ Party, says the same. “That [rise] has a limit. This narrative will be deconstructed and he will face an even bigger crisis,” he told The Brazilian Report.

Curiously, that is the same strategy the center-right adopted 15 years ago, when the Lula administration was against the ropes, facing numerous corruption scandals and even talks of impeachment. The Brazilian Social Democracy Party (PSDB) — the main opposition group at the time — decided to “let Lula bleed” until the 2006 campaign, when the PSDB hoped to retake the presidency.

But cash-transfer policies had a huge effect on voters’ wellbeing and Lula managed a landslide runoff-stage win, cementing himself as the defining political force in Brazil. Of course, he was helped by an unprecedented commodities boom — which fueled economic growth and brought about historically low unemployment rates. Mr. Bolsonaro, on the other hand, will have to face the worst economic crisis since the Great Depression.

Since day one of the Bolsonaro government, his detractors have predicted its imminent downfall. His administration, however, has proven to be surprisingly resilient — considering the sheer amount of controversy it has generated.

Still, even if Mr. Bolsonaro limps to the 2022 election, alive but broken, the Workers’ Party might not find itself in the position to claim the mantle of his main rival. 

To the right, figures such as São Paulo Governor João Doria are so far winning the battle to become Mr. Bolsonaro’s official opposition. And to the left, former presidential candidate Ciro Gomes and Maranhão state governor Flávio Dino are seeking to win over the progressive camp.[/restricted]


After acrimonious split, Bolsonaro could get back in bed with old political party

When no major parties agreed to take him on as a presidential candidate in 2018, Jair Bolsonaro found a home in the tiny Social Liberal Party (PSL). To the disbelief of the political establishment, Mr. Bolsonaro won the presidency by a wide margin — and became 2018’s biggest kingmaker, paving the way for several of his little-known party colleagues to win their races for governor and Congress. The PSL went from being a small group with eight seats to the second-largest bench in the lower house.

His stellar electoral performance gave Mr. Bolsonaro the impression that the PSL needed him much more than the other way around. After unsuccessfully trying to sequester control over the party, the president unceremoniously abandoned the group, in a bitter separation that included mutual accusations of malfeasance between him and party founder and chairman Luciano Bivar. 

Upon leaving, Mr. Bolsonaro announced that he would found his own political family, the Alliance for Brazil party. Despite the bold plan of being “not just a new party, but the greatest party in Brazilian history,” the Alliance was an utter flop.

And in a bizarre twist, a reconciliation between Mr. Bolsonaro and the PSL might now be on the table. He admitted the possibility during a live broadcast on social media, and PSL lawmakers confirmed the idea to The Brazilian Report as something that could be confirmed as early as next week. “It is hard to form a [new] party, but not impossible. The pandemic delayed it […] I can’t be 100-percent invested in the Alliance [for Brazil], I’ve got to look at other parties,” Mr. Bolsonaro told his followers.

It has indeed been a Herculean task for the president’s entourage. The arduous bureaucratic process of finalizing a party’s creation includes gathering the physical signatures of 500,000 voters from at least nine different states. The Alliance for Brazil has only managed to rustle up around 3 percent of the required total. 

Conditions for reconciliation

Brazilian electoral law forbids independent candidates from running, but it’s not as if Mr. Bolsonaro has no options. He mentioned proposals from three parties — naming one of them, the right-wing Brazilian Labor Party (PTB), which is led by the notoriously corrupt former Congressman Roberto Jefferson.

That gives the president some leverage to negotiate the conditions for his return. The Brazilian Report confirmed that the list includes revoking the suspension of 12 lawmakers who sided with the Bolsonaro family during the acrimonious split last year, ending litigation within the party, and sharing power of executive positions among the PSL’s branches around the country. In return, the president would give up on creating its own party.

PSL founder Luciano Bivar told The Brazilian Report that he only agrees with one condition: pardoning the pro-Bolsonaro lawmakers. “We’re in talks,” he said, citing a return of the head of state to the PSL ranks only as a “possibility.” Mr. Bivar is set to meet with Mr. Bolsonaro next week.

The PSL is split between two fringes of the far-right — one more aligned with the Bolsonaros and another closer to São Paulo Governor João Doria, who belongs to the Brazilian Social Democracy Party (PSDB). “Mr. Bolsonaro once told a supporter to ‘forget the PSL.’ Now he comes back begging for forgiveness. Do you realize who is the repentant traitor?” said Júnior Bozzella, head of the PSL in São Paulo.

Another major figure within the PSL who is looking to keep a safe distance from Mr. Bolsonaro is Senator Major Olímpio — a friend-turned-foe of the presidential clan. “I said it once and I’ll say it again: anyone with a shred of self-respect won’t take this guy back!” he told The Brazilian Report.

As we know, however, politicians easily leave self-respect aside under the right circumstances. With Mr. Bolsonaro posting the highest approval ratings he has ever had, it is difficult to imagine many political parties turning him down.[/restricted]


Who controls the purse strings in the Brazilian government?

The Jair Bolsonaro administration may be going through a defining moment regarding its economic policy. Some of the president’s key advisers — including the government’s military wing — advocate for increasing public spending in order to offset the economic effects of the pandemic and kickstart the economy. This would include major infrastructure projects, as well as social policies — in a clear strategy to make Mr. Bolsonaro’s re-election in 2022 viable.

These advisers are clashing with the government’s pro-austerity branch, headed by Economy Minister Paulo Guedes. Since the 2018 campaign, Mr. Guedes has been the “guarantor” of Mr. Bolsonaro’s economic policy — the insurance that the government would guide itself through pro-market reforms, employing the utmost zeal to tame public spending.[restricted]

As the backdrop to this dispute, the government is preparing its draft of the 2021 budget, which must be submitted to Congress by the end of the month. At stake is one of the most effective instruments to tame the public deficit: the federal spending cap. Created late in 2016 amid considerable controversy, it states that the federal budget can only grow from one year to the next in order to match inflation. 

Behind the scenes, however, the government is trying to create breathing room to spend more money. Earlier this year, Congress voted on the creation of a so-called “War Budget,” creating a separate budget for spending related to the Covid-19 pandemic — and now the tug of war will decide if other spending areas will be included as “exceptions” to federal spending rules.

Or, whether this parallel budget may be extended for an extra year — until December 2021. 

The Senate-affiliated Independent Fiscal Institute had already admitted there is no space to increase expenditures without breaking the cap. For 2021, mandatory spendings — including pensions and payroll — are likely to swallow up almost all of what is available.

Alessandra Ribeiro, director of Macroeconomics and Sector Analysis at consultancy firm Tendências, tells The Brazilian Report that the risk of noncompliance with the spending cap and fiscal disorder is increasing.

“The dispute is very heavy and will define what the government will be. Our risk perception regarding the fiscal framework, the changing in the spending cap, has increased a lot,” says the economist. “There is pressure for more expenses, whether that be with investment in public works or with an income program. These ideas gained strength with the pandemic because there were substantial effects on the economy. Add that to the municipal elections [to be held later this year] — in which this type of plan helps candidates — and the slowness expected for economic recovery.”

2021 budget: the battle over ‘Brazil’s Marshall Plan’

Issued from the barracks, cabinet members Walter Braga Netto (Chief of Staff) and Tarcísio Freitas (Infrastructure) have joined forces with Regional Development Minister Rogerio Marinho to launch a plan dubbed by government officials as ‘Brazil’s Marshall Plan,’ consisting of a vague list of potential infrastructure projects that would create jobs and reverse the recessive cycle. But Economy Minister Paulo Guedes compared the project to “pickpocketing the government.”

“We cannot be deceived. Growth comes from private investment, tourism, the opening of the economy, reforms. (…) Brazil failed because it followed the developmental model, Brazil stagnated. The policy was corrupted; the economy stagnated through excessive public spending. How is a broken government going to make big public investments?”

Brazil’s Marshall Plan was presented in April but has made no progress since. Officially, the cabinet ministers are currently analyzing which projects will be the priorities before releasing the list. The Infrastructure Ministry has reportedly requested BRL 40 billion (USD 7.5 billion) for projects, while Mr. Marinho wants BRL 35 billion. Local daily newspaper O Globo states the final list should be disclosed before September.

budget Paulo Guedes publicly compared the "Brazilian Marshall Plan" to “pickpocketing the government.” Photo: Marcos Corrêa/PR
Paulo Guedes publicly compared the “Brazilian Marshall Plan” to “pickpocketing the government.” Photo: Marcos Corrêa/PR

Tarcísio Freitas was the guest on the July 31 edition of President Jair Bolsonaro’s weekly live social media broadcasts. For almost an hour, he discussed his plans to resume work on infrastructure projects that are suspended due to a lack of funds.

The president’s eldest son, Senator Flávio Bolsonaro, publicly backed Mr. Freitas. “It’s an equation where you can’t do magic. On the one hand, Paulo Guedes does not want to spend because BRL 700 billion has already been spent fighting the pandemic. (…) On the other hand, I think there has to be some flexibility. (…) I believe that Paulo Guedes will have to find a way to get more money to continue these actions with a social and infrastructure impact,” the president’s son told newspaper O Globo.

Economist Alessandra Ribeiro sees no space for this spending without changing the rules of the federal cap. “The point is that there is a lot to fit in; the calculation doesn’t add up. If the government increases spending by BRL 40 billion, the cap is probably already going to be breached.”

According to Ms. Ribeiro, it is possible to accelerate public concessions to increase the amount of private capital in these projects. Still, this is not the most likely scenario and wouldn’t be completed in time for the 2022 election. “For this to happen, the macroeconomics has to be in order; it needs a perception of stability, that Brazil will fulfill its commitments. Without this macro stability, to attract long-term investors, this does not work.”

Support shifting and the emergency salary

The electoral process is something to be considered when analyzing the dispute over the funds. The pandemic has put stress on several different aspects of the government, beyond the management of public health. The fact that a significant share of the population is now out of work puts additional pressure on the president’s popularity.

Mr. Bolsonaro lost part of his original support base with his poor management of the Covid-19 crisis, but he has been able to retain popularity by gesturing to new followers. As things stand, the president’s reputation is being propped up by a region of Brazil that used to oppose him, and a wealth transfer measure his own government was firmly against.

At the beginning of the Covid-19 pandemic, Paulo Guedes was willing to provide unemployed and low-income Brazilians with an emergency salary of BRL 200 (USD 37) per month. After a long dispute and plenty of pressure from Congress, the Bolsonaro administration agreed to bump the value up to three monthly payments of BRL 600. Though it did so begrudgingly, this cash-transfer policy was the right move for Mr. Bolsonaro’s popularity. However, it comes at a monthly cost of BRL 50 billion for the public coffers.

The emergency salary largely assisted families in the Northeast region of Brazil, where President Bolsonaro traditionally polled poorly. His popularity then increased, and he has made a point of visiting the region more frequently, launching public works and promising other infrastructure projects.

A new alliance in Congress has influenced this shift. The Big Center — a group of small- and medium-sized conservative parties willing to exchange political support for control over parts of the budget — has agreed to side with President Bolsonaro, thus safeguarding the head of state from impeachment, for the time being. Many of the Big Center’s leaders hail from the Northeast, and rely on projects in the region to further their political goals.

The signs from Paulo Guedes

With his adversaries gaining importance, uncertainty about Paulo Guedes’ role in the government has emerged. According to analysts who spoke to The Brazilian Report, the Economy Minister is still seen as Mr. Bolsonaro’s guarantor for the financial market.

Last week, Treasury Secretary Bruno Funchal said the ministry does not want to break the federal spending cap: “no way.” 

“We want things to be as transparent and as correct as possible,” said Mr. Funchal, one of Mr. Guedes’ closest assistants.

According to economist Alessandra Ribeiro, the federal spending cap’s infringement could even result in the Economy Minister’s resignation. “We even see some signs that Mr. Guedes has been accepting more, but we don’t think he would approve fiscal irresponsibility. In our pessimistic scenario, he leaves the government in case it breaches the spending cap.”[/restricted]


Explaining Brazil #118: Bolsonaro’s ticket to re-election

Brazilians are heading to the polls in November to elect new mayors and city councilors in each of the country’s 5,570 municipalities. But the most important election before the 2022 presidential race will happen within the confines of Congress: the decision on who will be the next House Speaker and Senate President. That will determine which measures the government will manage to pass to counter the effects of the pandemic — and determine whether Jair Bolsonaro’s desire for re-election is realistic or not. 

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Explaining Brazil is made by:

  • Gustavo Ribeiro is the editor-in-chief of The Brazilian Report. He has extensive experience covering Brazilian politics. His work has been featured across Brazilian and French media outlets, including Veja, Época, Folha de S.Paulo, Médiapart, and Radio France Internationale.
  • Euan Marshall is a journalist and translator who has lived in São Paulo, Brazil since 2011. Specializing in Brazilian soccer, politics and the connection between the two, his work has been published in The Telegraph, Al Jazeera, The Independent, among others.

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Brazil Daily

The U.S. has an image problem in Latin America

We’re covering the U.S.’s image problem in Latin America. Brazil’s bold — and uncertain — Amazon railway project. And the fight to control Congress and its agenda.

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The Americas no longer ‘for the Americans’

A fresh Gallup poll among 135 countries shows that approval for U.S. global leadership [restricted](33 percent) is virtually tied with rates for China and Russia (32 and 30 percent, respectively). In the Americas, U.S. leadership is viewed very unfavorably by its closest neighbors, Canada and Mexico (22 and 17 percent), but is particularly low in wealthy South American countries, such as Chile and Uruguay (16 and 19 percent). In Brazil, approval for U.S. leadership has remained somewhat stable, at 38 percent.

By the numbers. Approval of U.S. leadership plummeted to 24 percent during Donald Trump’s first year in office, but has resurged recently to an overall rating of 34 percent. Meanwhile, 35 percent of citizens in the Americas are in favor of Germany as a global leader; China has 32-percent approval, and Russia is seen positively by 28 percent of respondents.

Why it matters. The poll shows how China has augmented its influence over Latin America by way of investments in infrastructure, energy, and mining — but also through its increased importance as a trading partner. 

  • “For many countries of the region, the Asian giant is either their top or second-biggest partner,” Mauricio Santoro, an international relations professor at the State University of Rio de Janeiro, tells The Brazilian Report. In Brazil’s case, China is the destination for 40 percent of overall exports, mainly comprising basic commodities.

What happened. Over the past decades, U.S. relations with Latin America have shifted significantly. The region was never a priority for presidents such as George W. Bush, Barack Obama, or Donald Trump. The latter’s term has also been characterized by his aggressive stance toward the region, often warning of a Latino “invasion” in the U.S. “His style [for Latin America] is one of demands, threats, and punishment,” said Peter Hakim, president emeritus of the Inter-American Dialogue, speaking to our Explaining Brazil podcast.

Future relations with Latin America. As things stand, former Vice President Joe Biden seems poised to win the U.S. presidency in November. While no one should expect Mr. Biden to elect Latin America as a priority, tensions with the region are likely to fall. With one notable exception: Brazil.

  • Brazilian President Jair Bolsonaro has gambled on keeping a close relationship with the Trump White House (not the U.S. per se) as his top foreign policy priority. On multiple occasions, he broke with tradition and openly said he hopes Mr. Trump wins re-election. On Sunday, his son, Congressman Eduardo Bolsonaro, published a pro-Trump ad on Twitter (featuring President Bolsonaro). It sparked a reaction from the U.S. Congress: “We’ve seen this playbook before. It’s disgraceful and unacceptable. The Bolsonaro family needs to stay OUT of the U.S. election,” tweeted Eliot Engel, chairman of the Foreign Affairs Committee.
  • Mr. Bolsonaro is not popular in the U.S. Congress. In June, 24 Democrats from the U.S. Congressional Committee on Ways and Means voiced their “strong objections” to any rapprochement with Brazil. A democrat in the White House would spoil Mr. Bolsonaro’s foreign agenda.

Brazil begins infrastructure roadshow

This week, the Brazilian government begins its quest to find investors for the Ferrogrão Project — a 933-kilometer railway connecting the heart of Brazil’s soy-growing country to an Amazon port. Talks begin on Thursday and run through August 7. 

  • Confirmed meetings include Spain’s Sacyr and Acciona, Japan’s Sumitomo, as well as China’s CCCC and CRCC. National logistics groups VLI, Ecorodovias, and Hidrovias do Brasil will also meet with government officials.
  • Also on the government’s radar are multilateral organizations that can help with funding, such as the Development Bank of Latin America (CAF) and the New Development Bank (NDB, a.k.a. the BRICS bank).
  • On August 10, the Foreign Affairs and the Infrastructure Ministries will hold talks with PIF, the sovereign wealth fund of Saudi Arabia. In October 2019, President Jair Bolsonaro announced that Saudi crown prince Mohammed bin Salman had pledged to invest USD 10 billion in Brazil, by way of a yet-to-be-created sovereign fund — and had cited the railway as a priority project.

Why it matters. Budgeted at BRL 8.4 billion (USD 1.6 billion), the Ferrogrão railway is one of the boldest infrastructure projects in Brazil right now — with an estimated internal rate of return on investment of 11 percent. It would quickly become one of Brazil’s key routes for grain distribution to foreign markets.

Yes, but … The railway would run through the Jamanxim National Park — an environmental conservation unit — and two nearby indigenous reserves. Many potential suitors to the project fear an image crisis, precisely since Brazil has become the world’s bogeyman when it comes to the environment. Deforestation rates have run rampant in recent years, and President Jair Bolsonaro’s nonchalant approach to the environmental crisis has made investors wary of the country.

What they are saying. The government claims that only 0.06 percent of the Jamanxim reserve would be affected. It also claims the railway will be 4 to 5 kilometers away from indigenous land, which in the government’s estimations is enough to ensure the safety of native groups. 

  • The government has signed a partnership with UK organization Climate Bond Initiative, and plans to invest BRL 750 million in socio-environmental compensations.
  • Plus, project managers are stressing how more environment-friendly a railway is when compared to roadways — Brazil’s leading mode of transport.

Big Center not that big anymore

On Monday, two parties — the Brazilian Democratic Movement (MDB) and Democratas (DEM) — decided to leave the so-called “Big Center,” a coalition of moderately conservative forces which band together to give support to any sitting administration and leverage more power for themselves. The move was an act of opposition to the group’s leader, Arthur Lira — and a clear shot at President Jair Bolsonaro, who has become close to Mr. Lira in recent months, making him the unofficial government whip in the House.

Result. With the exit of the MDB and DEM parties, the Big Center has shrunk from having 221 seats in the lower house to just 158 (out of a total of 513).

Why it matters. In six months, Congress will elect a new House Speaker and a new Senate President. For the fortunes of the federal government, these elections might actually be more important than this year’s municipal elections, as the heads of congressional chambers have immense agenda-setting powers.

Opposing forces. Congressman Arthur Lira is vying for the Speaker position himself, while incumbent Rodrigo Maia — who does not see eye to eye with President Bolsonaro — wants someone outside of the government’s influence bubble to succeed him. 

What else you need to know today

  • Revenue. Between March and June, the state of São Paulo collected 10 percent less from ICMS — its state tax on goods and services. This levy is the states’ main source of revenue and helps finance public institutions such as the Universities of São Paulo and Campinas — Brazil’s top two research institutions.
  • Public bank. The government is reportedly pursuing former Santander executive Conrado Engel to head Banco do Brasil, after current CEO Rubem Novaes issued his resignation. 
  • Law enforcement. The Justice Ministry wants to approve a Federal Police ordinance this week to gather Brazil’s criminal records into a single national database. Today, there are 27 separate state-level databases, between which sharing and transferring information is not easy — and just a handful are connected to the Feds’ records. This project, championed for the last 10 years, would cost BRL 90 million
  • Aviation. Users of tourism platform Trip Advisor have chosen Brazilian Azul Airlines as the world’s best carrier.
  • Impeachment. Rio de Janeiro Governor Wilson Witzel got a rare — and much-needed — win in his struggle for survival in State Congress. Based on a technicality, Supreme Court Chief Justice Dias Toffoli agreed with Mr. Witzel’s defense and dissolved the committee overseeing his impeachment proceedings in Rio’s state legislature, giving him a lifeline. Late in May, the governor was targeted by a Federal Police operation and is suspected of taking kickbacks from companies that embezzled part of Rio’s coronavirus budget.
  • Business. Construction group Odebrecht ratified its court-supervised recovery process. The biggest administration process in Brazilian history will restructure BRL 50 billion in debts (another BRL 48 billion were excluded from the process, as they refer to debts between companies within the Odebrecht group).[/restricted]